No. 170.
Mr. Denby to Mr. Bayard.

No. 556.]

Sir: I have the honor to inclose herewith a copy of my communication to the Yamên.

The statement of the rights of foreigners and the taxation on foreign goods is forcibly and clearly made by the dean of the diplomatic body.

The ministerial body is largely indebted to him for his able presentation of the important questions handled in this communication and in those which precede it.

I rejoice to see the ministers take up unanimously and seriously all these questions.

Sir John Walsh am, Mr. von Brandt, and I have at divers times presented most of these subjects to the consideration of the foreign office, but they are now brought to the attention of the Government for the first time by the concerted action of all the ministers.

I anticipate favorable results therefrom.

I have, etc.,

Charles Denby.
[Inclosure in No. 556.]

Mr. Denby to the Foreign Office .

[To be sent before the 26th of January in the form of an official “white” note.]

Your Highness and Your Excellencies:

In the month of July, 1886, the lekin authorities at Taiwan Fu claimed that foreign merchants established there should pay lekin on native produce, their property, forwarded from Taiwan Fu to Auping for shipment at the latter place.

In order to avoid a complete stoppage of trade and the reclamations for damages which would not have failed to result from it, Her British Majesty’s consul at Taiwan Fu made an arrangement with the local authorities according to which foreign exporters were to be allowed to forward their goods pending the decision to be arrived at at Peking, on depositing with the Chinese authorities a guaranty for the amount of lekin claimed.

To the representation of some of the foreign legations to the Yamên of the illegality of the pretension put forward by the lekin authorities at Taiwan Fu, your highness and your excellencies replied that instructions had been given to the inspector-general of foreign maritime customs to send one of his officials to Formosa to inquire into the matter and to make the necessary arrangements on the spot.

Since then nearly eighteen months have elapsed without anything having been done by the Tsung-li Yamên or by the inspector-general, while, on the other hand, the lekin authorities have not only not modified their pretensions, but have lately even claimed the payment of the guaranty notes given by the foreign exporters.

There can be no doubt of the illegality of the action of the lekin authorities. Native produce, the bona fide property of foreigners, has, on exportation, to pay no other duty than the export duty, or if it is shipped to a Chinese port, coast-trade duty; the foreign exporter has to do only with the custom-houses established at the places or ports open to foreign commerce, and the lekin authorities have no right to interfere with his business, To claim lekin on produce between Taiwan Fu and Auping would [Page 255] be equivalent to doing so between Tientsin and Taku, Shanghai and Wusung, Ganton and Whampoa, and between all the other places where the market open under treaty is not at the same time the place of shipment.

The rules under which a foreigner has to pay taxes on native produce are simple and clear: If he purchases in the interior he has either to pay the transit duty, or, if he does not takeout a transit pass, all inland taxes legally claimed from a native merchant.

If he purchases it in an open place, he has neither to pay any tax whatever, nor is it his business to convince himself that the native merchant from whom he buys has paid the inland taxes, it being the duty of the Chinese authorities and not of the foreign merchants to protect the Chinese exchequer against defraudations. On exportation the foreign merchant has to pay only those duties paid by treaty and none other.

The action of the Taiwan Fu lekin authorities being clearly in contravention of the above rules, which have been in force ever since the conclusion of the treaties, I have the honor (again) to request your highness and your excellencies to forward without delay the necessary instructions to the lekin authorities at Taiwan Fu to abstain from their illegal proceedings and to act in future according to the rules laid down in the treaties as enunciated above.

I avail myself, etc.,

Charles Denby.